Shareholders’ Letter, continued
In May, 2005, we announced the conversion of a newsprint machine at Calhoun to produce a lightly coated paper grade earmarked for the growing direct mail and insert marketplace. We expect to complete this conversion in May, 2006, on time and on budget. We have a similar opportunity at our Thunder Bay site to implement the conversion of a newsprint machine to ultra lightweight coated paper and are evaluating this opportunity closely.
Our decision to proceed will be subject to achieving a significant reduction in debt, improving our bottom line, and attaining a better operating environment in Ontario.
Priorities
Your management team is working aggressively to return this company to profitability and to pay down debt. Towards that end, we have very clear priorities:
- Execute the strategic realignment of our assets. This involves converting our integrated kraft mills to higher value products, making prudent investments in our core newsprint mills to maintain their cost competitiveness, and divesting underperforming and non-core assets.
- Complete the implementation of the $80 million cost reduction program announced last fall. A large part of this effort is centered on reducing our purchased energy requirements and achieving additional operating efficiencies. We have a proven track record of implementing cost reduction initiatives and I fully expect we will achieve this goal by year end.
- Sell approximately $300 million of timberlands in the U.S. South and Canada by the end of 2006. Proceeds from these asset sales will be focused on debt reduction.
- Complete the conversion of a Calhoun newsprint machine to coated during the second quarter of the year.
- Continue discussions with several of the provincial governments in Canada to address our need for competitively priced energy and wood fiber.